‘No one knows how big it is’: Chinese steelmaker reveals rubbery figures after state sells stake to private player
Internal audit reveals shortfall in inventory for listed firm Fushun, raising the spectre of delisting
The listed unit of a Chinese steelmaker touted by a government as a model of debt restructuring has admitted having inaccurate inventory figures – just six months after a private investor sank billions into the parent company.
Fushun Special Steel, the Shanghai-listed subsidiary of Dongbei Special Steel, issued three risk warnings via the Shanghai Stock Exchange on Wednesday, saying its books were not accurate, it would report losses for 2017, and it might delist.
Analysts said the discovery could deter other private investors from buying into troubled state-owned enterprises just as Beijing is trying to enlist private players to revive ailing state businesses through “mixed ownership reform”.
Half a year ago, a firm controlled by private Chinese steelmaker Shagang ploughed 4.5 billion yuan (US$711 million) into Dongbei Special Steel for a 43 per cent equity stake in a restructuring deal involving deep haircuts for creditors and a series of debt-to-equity swaps.
The deal gave Shagang 38.22 per cent of Fushun, replacing the Liaoning government as the listed unit’s biggest and controlling stakeholder.